Some of our favorite recent tax fraud cases.
Miami and Tampa, Fla.: The U.S. has asked federal courts to permanently bar two Florida preparers from preparing federal income tax returns in connection with separate alleged frauds that may have cost the government millions of dollars.
In the first case, the government seeks to bar Broward County, Fla., preparer Ernice Joseph and his businesses, Ebenezer Tax Services Inc. and Primo Tax Service Inc., from preparing returns for others. Joseph and his businesses are alleged to have prepared federal returns that unlawfully understated income tax liabilities and overstated refunds through a variety of schemes, including unlawfully claiming the EITC by reporting fictitious businesses or business income on Schedule Cs and claiming false education and other credits.
According to the complaint, the IRS examined 76 returns prepared by Joseph or Ebenezer Tax and found that 74 contained a deficiency. The complaint alleges that Joseph and his companies’ schemes cost the U.S. Treasury more than $45 million.
In the second case, the feds filed to stop Octavio Cruz and his company, Advantage Accounting Corp., from preparing federal income tax returns for others. Cruz has prepared returns since approximately 1998 with the help of his family. Operating first as Cruz and Cruz Accounting and later as Advantage Accounting Corp., he directly or indirectly prepared more than 30,000 returns for clients since 2009.
The complaint alleges that Cruz prepares returns that unlawfully understate tax liabilities and inflate refunds by fabricating or exaggerating deductions and credits. Cruz’s practices include fabricating losses for nonexistent businesses on Schedule Cs and falsely claiming child-care and residential energy credits and AOCs.
The complaint alleges that loss to the U.S. Treasury from the defendant’s activities may total millions of dollars.
Rayville, La.: Preparer Donald Ray Jackson faces 18 felony counts of suspected fraud after allegedly filing fraudulent income tax returns containing fabricated business losses. Seven of Jackson’s clients told investigators with the Louisiana Department of Revenue that they did not own businesses and two said they did own businesses but did not sustain or claim to have sustained any losses.
Jackson’s alleged crimes cost Louisiana taxpayers more than $325,000 in fraudulent refunds.
Jackson was arrested and booked on nine counts each of computer fraud and filing or maintaining false public records.
Detroit: Preparer Monique Gray has been sentenced to 30 days in prison and ordered that pay $102,899 restitution for filing a false federal income tax return.
According to court records, Gray owned and operated MO Tax Services and U&M X Spress Inc., the latter a trucking company. In 2008 Gray’s businesses earned combined gross receipts of approximately $167,232, which Gray knew she had responsibility to report. Instead, she underreported her gross business income by more than $155,774 to reduce her tax liability.
Gray’s actions cost the government some $14,833 for the 2008 tax year and overall caused a tax loss of $102,899 for 2006 through 2009.
Baton Rouge, La.: Seven preparers have been arrested after investigations by the Louisiana Department of Revenue and the Louisiana Attorney General for felony tax fraud. Authorities said the probe uncovered more than $1.4 million in fraudulent refunds and improperly reduced tax liabilities.
Elxzina Granger, of Lafayette, La., was charged with 13 counts each of computer fraud and filing or maintaining false public records. Granger allegedly fabricated business losses on federal and Louisiana state returns for the 2012 tax year. Clients of Granger’s contacted by investigators said they did not own businesses and had not provided her with any business-related documentation for their tax filings. Granger’s alleged crime resulted in $45,982 in fraudulent income tax refunds.
In a separate case, five preparers at We Care Tax Service in LaPlace, La., are suspected of fabricating business losses for clients (investigators determined that none of those clients owned a business). The alleged fraud in this case amounts to $1,175,541.
The five are:
- Sara Daspit-Lee, charged with nine counts of filing or maintaining false public records and nine counts of computer fraud;
- Emile Lee III, charged with nine counts of filing or maintaining false public records and nine counts of computer fraud;
- Johnnae Smith, of Chalmette, La., charged with 11 counts each of computer fraud and filing or maintaining false public records;
- Bridget Butler, of New Orleans, charged with nine counts each of computer fraud and filing or maintaining false public records; and,
- Delecisha Amos-Allen, charged with five counts each of computer fraud and filing or maintaining false public records.
In a fourth case, preparer Deatrice Garrison Minor, of Marrero, La., was arrested and booked on six felony counts related to tax fraud. Minor is accused of submitting fraudulent income tax returns on behalf of clients of her business, Divine Vision Boutique & Tax Service, with addresses listed in Lafayette, Marrero and Gretna, La.
Investigators said that along with the improper returns, Minor submitted false W-2s with inflated wages and withholding amounts. The clients told investigators that they had never been employed by the individuals and entities listed on the documents and that they had never given Minor permission to file income tax returns on their behalf.
Minor faces one count of injury to public records, one count of illegal transmission of monetary funds, one count of principal to theft, one count of theft and two counts of attempted theft. Alleged fraud in this case amounts to $36,986 in theft and $136,324 in attempted theft.